Exhibit 10.8
CONTINGENT EQUITY FACILITY AGREEMENT
CONTINGENT EQUITY FACILITY AGREEMENT (this "Agreement"), dated
as of January 22, 2003, by and among SOUTHERN STAR CENTRAL CORP., a Delaware
corporation (the "Corporation"), AIG HIGHSTAR CAPITAL, L.P., a Delaware limited
partnership ("Highstar"), ASC CENTRAL, LLC, a Delaware limited liability company
("ASC"), and each other party that may become a party to this Agreement from
time to time in accordance with the terms hereof.
WHEREAS, as of the date of this Agreement, immediately prior
to the transaction referred to in the next succeeding "Whereas" clause, Highstar
is the sole shareholder of the Corporation;
WHEREAS, on January 21, 2003, the Corporation and ASC entered
into a certain Securities Purchase Agreement (the "Securities Purchase
Agreement"), pursuant to which ASC has agreed to purchase 500 shares of Series A
Preferred Stock of the Corporation, par value $.01 per share (the "Series A
Preferred Stock"), and a warrant to purchase certain shares of common stock of
the Corporation, par value $.01 per share (the "Common Stock");
WHEREAS, the Securities Purchase Agreement requires as a
condition precedent to the purchase of the Series A Preferred Stock by ASC that
the parties hereto execute and deliver this Agreement; and
WHEREAS, Highstar shall derive substantial benefit from the
purchase of the Series A Preferred Shares by ASC, and in consideration therefor
Highstar desires to execute and deliver this Agreement pursuant to which
Highstar will agree, under the terms and circumstances described herein, to make
additional equity contributions to the Corporation;
NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Contingent Equity Facility.
(a) Highstar hereby agrees to provide to the Corporation, on
the terms and conditions described herein, a contingent equity facility (the
"Contingent Equity Facility") of $7,500,000 (the "Maximum Funding Obligation
Amount"), subject to increase pursuant to paragraph (b) below and to reduction
in accordance with Section 2 hereof, which Contingent Equity Facility may be
drawn upon by the Corporation for the purposes and subject to the limitations
set forth in this Agreement.
(b) Highstar hereby agrees that, if the Corporation shall
issue additional shares of Series A Preferred Stock in addition to the 500
shares being sold to
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ASC pursuant to the Securities Purchase Agreement, the Maximum Funding
Obligation Amount set forth in paragraph (a) above shall be increased by an
amount equal to (i) $7,500,000, multiplied by (ii) a fraction, the numerator of
which shall be the number of additional shares of Series A Preferred Stock so
purchased, and the denominator of which shall be 500.
2. Funding Obligations.
(a) If, at any time after the date of this Agreement until the
third anniversary of the date of this Agreement (the "Funding Term"), subject to
the other provisions of this Agreement, the Corporation has insufficient cash to
fund the payment in full of any dividends required to be paid on the Series A
Preferred Stock under the Corporation's Amended and Restated Certificate of
Incorporation (the "Amended Charter") during the Funding Term (a "Dividend
Deficit"), the Corporation shall provide written notice (a "Funding Notice") to
Highstar and ASC of such Dividend Deficit, which notice shall also state that
the Corporation is drawing upon the Contingent Equity Facility in the amount of
such deficit not in excess of the Maximum Funding Obligation Amount (after
taking into account all prior contributions pursuant hereto). Promptly upon
receipt of such Funding Notice and confirmation by Highstar of such deficit,
Highstar shall make a capital contribution to the Corporation in an amount equal
to the amount of such Dividend Deficit, not in excess of the Maximum Funding
Obligation Amount (after taking into account all prior contributions pursuant
hereto) (a "Funding Obligation"). The Corporation shall be permitted to draw
upon the Contingent Equity Facility on one or more occasions during the Funding
Term, but the aggregate of all prior contributions pursuant hereto and the
drawing then being made may not exceed the Maximum Funding Obligation Amount.
(b) In the event that a Dividend Deficit occurs during the
Funding Term and the Corporation has not provided a Funding Notice to Highstar
within ten (10) days prior to the Series A Dividend Payment Date (as defined in
the Amended Charter), ASC shall be entitled to provide to Highstar a Funding
Notice, in which case Highstar shall, promptly upon receipt of such Funding
Notice and confirmation by Highstar of such deficit, make a capital contribution
to the Corporation in an amount equal to the amount of such Dividend Deficit up
to the Maximum Funding Obligation Amount (after taking into account all prior
contributions pursuant hereto).
(c) Effective upon the first anniversary of the date hereof,
the Maximum Funding Obligation Amount shall be reduced by fifty percent (50%).
(d) All amounts contributed by Highstar to the Corporation
shall be applied by the Corporation solely to the payment of dividends on the
shares of the Series A Preferred Stock. The Corporation shall not enter into any
agreement (including any credit agreement or other agreement relating to
indebtedness for money borrowed) which limits the ability of the Corporation to
apply the funds contributed by Highstar hereunder.
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3. Issuance of Series B Preferred Stock. In consideration for,
and simultaneously with, the funding of each Funding Obligation by Highstar, the
Corporation shall issue to Highstar shares of Series B Preferred Stock of the
Corporation, par value, $.01 per share (the "Series B Preferred Stock"), having
the rights, preferences, privileges and restrictions set forth in the Amended
Charter and the Corporation shall add to the Corporation's paid-in capital, an
amount equal to such Funding Obligation less the par value of the Series B
Preferred Stock issued in relation thereto. The shares of Series B Preferred
Stock to be issued to Highstar shall be delivered to Highstar free and clear of
any encumbrances. The number of shares of Series B Preferred Stock to be issued
to Highstar in connection with the funding of each Funding Obligation shall be
determined by dividing such Funding Obligation by a per share price of $1,000.
In connection with any such issuance of Series B Preferred Stock, the
Corporation shall deliver a stock certificate representing the shares of Series
B Preferred Stock to be issued to Highstar. The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Series B
Preferred Stock, for the purpose of complying with the terms of this Agreement,
such number of its duly authorized shares of Series B Preferred Stock as shall
be sufficient to effect the terms of this Agreement. Any shares of Series B
Preferred Stock issued to Highstar pursuant to the terms of this Agreement shall
not be transferable by Highstar except to an affiliate of Highstar.
4. Termination of Contingent Equity Facility. The Contingent
Equity Facility and all Funding Obligations hereunder shall terminate upon
expiration of the Funding Term; provided, that, the Contingent Equity Facility
and all Funding Obligations hereunder shall earlier terminate in the event that
a Change of Control (as defined in the Amended Charter) shall occur. Upon
termination of the Contingent Equity Facility, Highstar shall have no obligation
to provide any additional capital to the Corporation.
5. Representations and Warranties.
(a) The Corporation hereby represents, warrants and certifies
to Highstar that each of the following representations and warranties with
respect to itself is true and correct:
(i) The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to
own its properties and assets and to conduct its business as
now conducted;
(ii) The Corporation has taken all necessary action to
authorize the execution, delivery and performance of its
obligations under this Agreement, which action has not been
superseded or modified, and this Agreement has been duly
executed and delivered by the Corporation and constitutes the
legal, valid and binding obligation of Corporation,
enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar
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laws affecting the enforcement of creditors' rights and
general principles of equity;
(iii) The execution, delivery and performance of this
Agreement do not violate (A) the Corporation's articles of
incorporation or by-laws or any resolution of its Board of
Directors or other committees charged with the governance of
its affairs, or (B) any contract to which it is a party;
(iv) No litigation is pending or, to its knowledge,
threatened which seeks to restrain it from performing its
obligations hereunder or the adverse outcome of which would
materially affect its business or its ability to perform its
obligations hereunder; and
(v) The shares of Series B Preferred Stock have been duly
and validly authorized and reserved for issuance. The shares
of Series B Preferred Stock, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable, and will not be issued
in violation of any preemptive rights and will be delivered to
Highstar free and clear of all encumbrances.
(b) Highstar hereby represents, warrants and certifies to the
Corporation that each of the following representations and warranties with
respect to itself is true and correct:
(i) Highstar is a limited partnership duly organized,
validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to
own its properties and assets and to conduct its business as
now conducted;
(ii) Highstar has taken all necessary action to authorize
the execution, delivery and performance of its obligations
under this Agreement, which action has not been superseded or
modified, and this Agreement has been duly executed and
delivered by Highstar and constitutes the legal, valid and
binding obligation of Highstar, enforceable in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights and general
principles of equity;
(iii) The execution, delivery and performance of this
Agreement do not violate (A) Highstar's certificate of limited
partnership or partnership agreement or any resolution of its
Board of Directors or other committees charged with the
governance of its affairs, or (B) any contract to which it is
a party; and
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(iv) No litigation is pending or, to its knowledge,
threatened which seeks to restrain it from performing its
obligations hereunder or the adverse outcome of which would
materially affect its business or its ability to perform its
obligations hereunder.
6. Counterparts. This Agreement may be executed in several
counterparts and all such executed counterparts shall constitute a single
agreement, notwithstanding that all of the parties hereto are not signatories to
the original or to the same counterpart. Each counterpart signature page so
executed may be attached to a master counterpart of this Agreement and each such
master counterpart as well as any and all other master counterparts shall
constitute a single agreement.
7. Survival. The terms of this Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. All representations, warranties and indemnities contained herein or
made in writing by the parties hereto in connection herewith shall survive the
execution and delivery of this Agreement and the performance of the obligations
contained herein.
8. Applicable Law and Dispute Resolution.
(a) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) Dispute Resolution. Any dispute, controversy or claim
among the parties relating to, arising out of or in connection with this
Agreement, including claims in tort, whether arising before or after the
termination of this Agreement (any such dispute, controversy or claim being
referred to as a "Dispute") shall be settled without litigation and only by use
of the following alternative dispute resolution procedure:
(1) At the written request of a party, each party shall
appoint a knowledgeable, responsible representative to meet and
negotiate in good faith to resolve any Dispute. The discussions shall
be left to the discretion of the representatives. Upon agreement, the
representatives may utilize other alternative dispute resolution
procedures such as mediation to assist in the negotiations. Discussions
and correspondence among the parties' representatives for purposes of
these negotiations shall be treated as confidential information
developed for the purposes of settlement, exempt from discovery and
production, and without the concurrence of all parties shall not be
admissible in the arbitration described below, or in any ancillary or
other legal proceedings. Documents identified in or provided with such
communications, which are not prepared for purposes of the
negotiations, are not so exempted and may, if otherwise admissible, be
admitted in the arbitration.
(2) If negotiations between the representatives of the
parties do not resolve the Dispute within sixty (60) days of the
initial written request, the
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Dispute shall be submitted to binding arbitration by a single
arbitrator pursuant to the Commercial Arbitration Rules, as then
amended and in effect, of the American Arbitration Association (the
"Rules"). Any party may demand such arbitration in accordance with the
procedures set out in the Rules. The arbitration shall take place in
New York, New York. The arbitration hearing shall be commenced within
six (6) months from the date on which an arbitrator is appointed and
continue until such time as an award has been determined, provided,
however, that the arbitrator may extend the arbitration beyond such
period for good cause. The arbitrator shall have the power to and will
instruct each party to produce evidence through discovery (i) that is
reasonably requested by the other party to the arbitration in order to
prepare and substantiate its case, and (ii) the production of which
will not materially delay the expeditious resolution of the dispute
being arbitrated; each party agrees to be bound by any such discovery
order. The arbitrator shall conduct the proceedings, including
discovery, briefing and hearings, in a fair, efficient and expedient
manner. No party shall be eligible to receive, and the arbitrator shall
not have the authority to award, exemplary or punitive damages unless a
statute requires that compensatory damages be increased in a specified
manner. The arbitrator shall rule on the Dispute by issuing a written
and reasoned opinion within thirty (30) days after the close of
hearings. The arbitrator's decision shall be binding and final.
Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction.
(3) Each party will bear its own costs and expenses in
submitting and presenting its position with respect to any Dispute to
the arbitrator; provided, however, that if the arbitrator determines
that the position taken in the Dispute by the nonprevailing party taken
as a whole is unreasonable, the arbitrator may order the nonprevailing
party to bear such fees and expenses, and reimburse the prevailing
party for all or such portion of its reasonable costs and expenses in
submitting and presenting its position, as the arbitrator shall
reasonably determine to be fair under the circumstances. Unless the
arbitrator orders otherwise pursuant to the foregoing sentence, each
party to the arbitration shall share equally the fees and expenses of
the arbitrator and the American Arbitration Association.
(4) Notwithstanding any other provision of this Agreement,
(i) either party may commence an action to compel compliance with this
section, and (ii) if any party, as part of a Dispute, seeks preliminary
injunctive relief or any other preliminary equitable remedy, then such
party shall be permitted to seek such preliminary injunctive or
preliminary equitable relief in any federal or state court or competent
jurisdiction before, during or after the pendency of a mediation or
arbitration proceeding under this section.
(5) In no other event shall either party be liable for
consequential, incidental, punitive, exemplary, or indirect damages, in
tort, contract or otherwise.
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(6) Pending final resolution of the dispute, the parties
hereto shall proceed with the performance of their obligations under
this Agreement.
9. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, addressed as follows:
(a) if to Highstar or the Corporation, to:
AIG Highstar Capital, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx Xxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
(b) with a copy to:
Xxxxxx X. Xxxx, Esq.
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx XxXxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000; and
(c) if to ASC, to:
ASC Central, LLC
c/o Aircraft Services Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Operations Manager - Energy;
(d) with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
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10. Amendments. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of Highstar,
the Corporation and ASC.
11. Successors and Assigns. No party hereto may assign its rights
and obligations under this Agreement to any third party, except that Highstar
may assign a portion of its interest in this Agreement to persons who become
holders of Common Stock following the date hereof; provided that no such
assignment shall release Highstar of its obligations hereunder.
12. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is intended
or shall be construed to confer upon any person other than the parties and
successors and permitted assigns any right, remedy or claim.
13. Further Assurances. The parties shall execute and deliver
such further instruments and perform such further acts as may reasonably be
required to carry out the purposes of this Agreement.
14. Entire Agreement. This Agreement constitutes the entire
understanding between the parties, and supersedes any prior understandings
respecting the subject matter of this Agreement, including without limitation,
the prior Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement through their duly authorized representatives as of the date hereof.
SOUTHERN STAR CENTRAL CORP.
By: _____________________________________
Name: Xxxxxxxxxxx X. Xxx
Title: President
AIG HIGHSTAR CAPITAL, L.P.
By: AIG Highstar Capital GP, L.P.
Its General Partner
By: AIG Highstar Capital
Management, LLC, Its General Partner
By: AIG Global Investment Corp., Its
Sole Member
By: _____________________________________
Name: Xxxxxxxxxxx X. Xxx
Title: Managing Director
ASC CENTRAL, LLC
By: AIRCRAFT SERVICES CORPORATION,
its Managing Member
_________________________________________
Name:
Title:
